When you file your taxes, you have two options for submitting your return with the Internal Revenue Service (IRS): electronically or by mail.
Both methods of submitting have their advantages and disadvantages. E-filing is safe, faster, and more convenient than paper filing, but filing by mail can be cheaper, though it requires the IRS longer to process refunds.
The Benefits of E-Filing
E-filing was first introduced in 1986, and it got off to a slow start. A scant number of tax professionals–five of them, according to the IRS–took advantage of the new technology at the time. The new filing method eventually caught on though and, as of 2018, approximately 90% of taxpayers e-filed their returns.
The biggest benefit of electronic filing is that you’ll receive almost immediate confirmation that the IRS has received your tax return.
If the IRS finds errors on your return, you’ll be given a rejection notice (usually within 24-48 hours), and the notice will typically indicate what triggered the action and what you can do to repair your tax return.
E-filing is more secure than paper filing, according to the IRS, because the return, with all of your sensitive information, is transmitted directly to the IRS computer system.
Your refund is likely to be processed faster because e-filing means the IRS does not need to sort or transcribe your tax return in its service center.
Less Human Error
There is a lesser chance that the IRS will make a error when calculating your return because IRS employees don’t need to manually enter your return line-by-line into its system.
You Do Not Have to Use a Tax Prep Program
You don’t have to use a costly tax preparation program to e-file your taxes–if you’re tax savvy, have a simple situation, and are prepared to understand, you can fill tax forms in directly using IRS free fillable forms. Be aware that you need to be comfortable completing basic tax forms to use the service as no advice is provided. And if your adjusted gross income (AGI) is less than $72,000, you may be better off with one of the IRS’ many free-file affiliates.
While there are tax prep tools that are free, many of the leading tax prep companies like TurboTax, TaxSlayer, and H&R Block charge fees for tax returns that go beyond a basic filing. Fees can exceed $100, depending on which sort of features you desire.
Glitches are always possible when you’re using the net. In 2020, TurboTax’s site experienced at least seven outages between April 15 and April 17. Additionally, your online service provider may face outages that could hamper your submitting effort.
Does Not Allow for Certain Filing Situations
Though e-filing supports most tax scenarios, there are certain scenarios it doesn’t support. For example, you can not file a return for someone who passed away, you can not attach images or PDFs to your return, nor can you file before the IRS opens e-filing for the year.
Advantages of Paper Filing
Filing a paper return can be very helpful in some specific scenarios that e-filing can’t accommodate.
You Have a Rare Filing Situation
E-filing can only do so much. For instance, if you will need to prepare a tax return for somebody who passed away, you must file a paper return. Also, paper filing lets you print and submit pictures or PDFs to supplement your own tax return.
You Want to Build Your Tax Experience
Many online tax prep tools automate the filing process by asking you questions and using your replies to complete forms without ever telling you which forms it’s filing on your behalf.
If you would like to know about, and better review, the details of your tax return, including all forms related to your tax situation, filing a paper return provides the transparency that you crave. You can fill out each form line-by-line and see firsthand all the calculations and considerations your refund requires.
There are lots of drawbacks to paper filing which make the process riskier and more taxing than e-filing.
Increases Chances of Errors
Data transcribers in the IRS must manually enter taxpayer information for every paper return they get. Because of this, it could lead to errors that you might need to fix through an amended return.
For filers who attempt paper filing after years of electronic filing, collecting all the forms necessary for things like student loan interest, mortgage interest, capital gains, and business deductions can be intimidating, and it might result in missing forms or mistakes.
You Will Need to Remember to Sign the Return
Veteran paper filers realize that you have to manually sign the paper return you submit, or the IRS will not accept it. Newbie paper filers often forget this fact, resulting in even longer delays than what you’d normally expect with a paper return.
Tips for Paper Filing
You can do a few things to streamline your return submission when you file :
- Make sure that your name and Social Security number are on every page, both back and front.
This is where the IRS will send any notices, so it’s important that you don’t make a mistake.
Mail your return to the right IRS service center, since the address can change based on which state you are in, and whether you’re including payment with your return. The IRS provides a state-by-state list online so you can find the correct address.
Get an automatic extension if you’re mailing your return near the official filing deadline of April 15, 2021. Bear in mind that you ought to make a payment with your extension if you think you’ll owe anything. Otherwise, you could be subject to penalties and interest.
The IRS provides a list of acceptable filing options on its website, Including the following options:
- Hire a tax professional to prepare your return.
Use the Volunteer Income Tax Assistance Program, or the Tax Counseling for the Elderly program, if you’re eligible. There are particular requirements for e-filing or paper filing should you use these programs.
In the unlikely event your identity is stolen and the thief files a tax return with your information, your e-filed return will be rejected by the IRS as a copy. You have to file a paper tax return in this situation and mail it in with Form 14039, the”Identity Theft Affidavit,” notifying the IRS of this matter.
- E-filing is quickly and provides several free options
- Web or website outages can cause frustrating delays for e-filers.
- Paper filing requires more time than e-filing and can be overpowering.
- Alternatives to filing taxes in your include hiring a tax professional or engaging in filing assistance programs.